(1)

By Decision No 2730/2000/ECSC (2), the Commission imposed a definitive anti-dumping duty on imports of coke of coal in pieces with a diameter of more than 80 mm, falling within CN code ex 2704 00 19 (TARIC code 2704001910), originating in the People's Republic of China (‘country concerned’ or ‘PRC’). The amount of the anti-dumping duty is equal to the fixed amount of EUR 32,6 per tonne of dry net weight.

(2)

In view of the expiry of the Treaty establishing the European Coal and Steel Community on 23 July 2002, the Council, by Regulation (EC) No 963/2002 (3), decided that anti-dumping measures which had been adopted pursuant to Decision No 2277/96/ECSC and which were still in force on 23 July 2002 were to be continued and governed by the provisions of the basic Regulation with effect from 24 July 2002.

(3)

On 11 December 2002, the Commission announced, by notice published in the Official Journal of the European Communities (4), the initiation of an interim review of the definitive anti-dumping measures applicable to imports of coke of coal in pieces with a diameter of more than 80 mm (hereafter ‘coke 80+’ or ‘the product concerned’) originating in the PRC in accordance with Article 11(3) of the basic Regulation and commenced an investigation.

(4)

The proceeding was initiated following a request lodged by Eucoke-EEIG (the ‘applicant’) on behalf of producers representing a major proportion of the total Community production of coke of coal in pieces with a diameter of more than 80 mm. The applicant alleged that dumping in respect of the PRC had continued and even increased and that the existing measures would no longer be sufficient to counteract the injurious effects of dumping. The evidence contained in the request for a review was considered sufficient to justify the initiation of the investigation.

(5)

The Commission officially advised the producers/exporters, the importers and the users known to be concerned, the representatives of the exporting country concerned, the applicant Community industry and the other known Community producers about the initiation of the interim review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation.

(6)

It is recalled that during the investigation of the present proceeding a number of interested parties provided information on a change in market conditions after the end of the investigation period (1 October 2001 to 30 September 2002), thus fulfilling the conditions required under Article 14(4) of the basic Regulation to justify the suspension of the measures currently in force.

(7)

The investigation showed that all requirements for suspending the anti-dumping measures were met. Therefore, by Commission Decision No 264/2004EC (5), the anti-dumping duty applicable to imports of coke of coal in pieces with a diameter of more than 80 mm originating in the PRC was suspended for a period of nine months.

(8)

By letter of 15 December 2003 to the Commission, Eucoke-EEIG formally withdrew its application.

(9)

With regard to the fact that the investigation has not brought to light any consideration showing that such termination would not be in the Community interest, it is considered that the present proceeding should be terminated in accordance with Article 9(1) of the basic Regulation.

(10)

However, during the investigation, it was found that there was a need to clarify the scope of application of the existing measures in view of the difficulties faced by an economic operator with respect to the application of the measures in force. Indeed, it was found that anti-dumping duties were being collected by the customs authorities of one Member State on shipments of coke destined for use in blast furnaces, which are not concerned by the anti-dumping measures, and comprise only a small part of the product concerned. In order to ensure a more efficient and uniform enforcement of the measures, the exemption provided for in Decision No 2730/2000/ECSC for exports which are a mixture of coke of coal in pieces of smaller size than the product concerned and coke of coal in pieces not exceeding 100 mm is replaced by an exemption covering a mixture in which the proportion of coke exceeding 80 mm does not constitute more than 20 % of the mixed shipment. In addition, the ISO standard should be used as the method of measurement.

(11)

The interim review should be terminated. The scope of application of the existing measures should be clarified,

(1)

By Regulation (EC) No 950/2001 (2), the Council imposed a definitive anti-dumping duty on imports into the Community of certain aluminium foil (‘the product concerned’) originating among others in Russia. By Commission Decision (2001/381/EC) of 16 May 2001 (3), an undertaking was accepted for a Russian exporting producer ‘United Company Siberian Aluminium’.

(2)

The rate of the duty applicable to the net, free-at-Community-frontier price, before duty, was set at 14,9 % for imports of the product concerned from Russia by Regulation (EC) No 950/2001.

(3)

On 20 March 2004 the Commission announced through the publication of a notice in the Official Journal of the European Union (4), the initiation of a number of partial interim reviews of anti-dumping measures applicable to imports of certain products originating in the People's Republic of China, the Russian Federation, Ukraine and the Republic of Belarus pursuant to Articles 11(3) and 22 (c) of the basic Regulation. The anti-dumping measure imposed on imports of certain aluminium foil originating in Russia is one of the measures on which the review was initiated (‘the measures’).

(4)

The review was launched at the initiative of the Commission in order to examine whether, as a consequence of the enlargement of the European Union on 1 May 2004 (‘enlargement’), it would be appropriate to adapt the measures.

(5)

Since a certain quantity of the imports of the product concerned originating in Russia is currently subject to a price undertaking for a specific volume, the review of the measures was initiated in order to examine whether this undertaking, which was drawn up on the basis of data for a Community of 15 Member States, should be adapted to take account of the enlargement.

(6)

All interested parties known to the Commission, including the Community industry, associations of producers or users in the Community, exporters/producers in the countries concerned, importers and their associations and the relevant authorities of the countries concerned as well as interested parties in the ten new Member States which acceded to the European Union on 1 May 2004 (‘the EU10’) were informed of the initiation of the investigation and were given the opportunity to make their views known in writing, to submit information and to provide supporting evidence within the time-limit set out in the notice of initiation. All interested parties who so requested and showed that there were reasons why they should be heard were granted a hearing.

(7)

In this regard, the following interested parties made their views known:

(8)

The product concerned is aluminium foil of a thickness of 0,009 mm or more up to not more than 0,018 mm, not backed, not further worked than rolled, presented in reels of a width not exceeding 650 mm, currently classifiable within CN code ex 7607 11 10. The product concerned is commonly known as aluminium household foil (‘AHF’).

(9)

AHF is manufactured by rolling aluminium ingots or foil-stock up to the desired thickness. Once rolled, the foil is annealed by a thermal process to make it pliable. Once rolled and annealed the AHF is presented on reels of a width not exceeding 650 mm. The dimension of the reel is determinant for its use, since the users of this product (‘spoolers’ or ‘rewinders’) will mount the AHF onto small end-rolls destined for retail sale. The AHF rewound onto smaller rolls is then used for multi-purpose short-life wrapping (mostly in households, catering and food and floristry retail business).

(10)

The Russian exporting producer subject to the price undertaking submitted that the volume of imports to which the price undertaking applies was established on the basis of its sales to the market of the EU15 and that, therefore, the undertaking should be revised in order to take due account of the market of the EU25. It claimed that such revision was essential in order to avoid discrimination in favour of the other exporters of the product concerned to the EU.

(11)

The Member States have made their views known and the majority of them support adapting the measures in order to take account of the enlargement.

(12)

An analysis was made of the available data and information which confirmed that the import volumes of the product concerned from Russia into the EU10 were significant. Considering that the volume of imports subject to the price undertaking currently in force was established on the basis of the imports into the Community of 15 Member States, it does not take into account the effect of the increase of the market following the enlargement.

(13)

Considering the above, it is concluded that to take account of the enlargement it is appropriate to adapt the measures in order to cater for the additional volume of imports into the EU10 market.

(14)

The original volume of imports subject to the price undertaking for the EU15 was calculated on the basis of the exports to the Community during the original investigation period of the Russian producer for whom an undertaking has been accepted. The amount of the increase of the volume of imports subject to the price undertaking has been calculated following the same calculation method.

(15)

Accordingly, it is considered appropriate that the Commission may accept a proposal for a modified undertaking reflecting the situation after the enlargement and on the basis of the method described in recital 14,

(1)

By Regulation (EC) No 1531/2002 (2) the Council imposed a definitive anti-dumping duty on imports into the Community of colour television receivers (‘the product concerned’) originating i.a. in the People's Republic of China (‘China’). By the Commission Decision 2002/683/EC (3), an undertaking was accepted for seven exporters in China: Haier Electrical Appliances Corporation Ltd, Hisense Import & Export Co. Ltd, Konka Group Co. Ltd, Sichuan Changhong Electric Co. Ltd, Skyworth Multimedia International (Shenzhen) Co., Ltd, TCL King Electrical Appliances (HuiZhou) Co. Ltd and Xiamen Overseas Chinese Electronic Co, Ltd.

(2)

The rate of the duty applicable to the net, free-at-Community-frontier price, before duty, was set at 44,6 % for imports of the product concerned from China by Regulation 1531/2002.

(3)

On 20 March 2004 the Commission announced through the publication of a notice in the Official Journal of the European Union (4) the initiation of a number of partial interim reviews of anti-dumping measures applicable to imports of certain products originating in the People's Republic of China, the Russian Federation, Ukraine and the Republic of Belarus pursuant to Articles 11(3) and 22(c) of the basic Regulation. The anti-dumping measure imposed on imports of colour television receivers originating in China is one of the measures on which the review was initiated (‘the measures’).

(4)

The review was launched at the initiative of the Commission in order to examine whether, as a consequence of the enlargement of the European Union on 1 May 2004 (‘Enlargement’), it would be appropriate to adapt the measures.

(5)

Since a certain quantity of the imports of the product concerned originating in China is currently subject to a price undertaking for a specific volume, the review of the measures was initiated in order to examine whether this undertaking, which was drawn up on the basis of data for a Community of 15 Member States, should be adapted to take account of the Enlargement.

(6)

All interested parties known to the Commission, including the Community industry, associations of producers or users in the Community, exporters/producers in the countries concerned, importers and their associations and the relevant authorities of the countries concerned as well as interested parties in the ten new Member States which acceded to the European Union on 1 May 2004 (‘the EU10’) were informed of the initiation of the investigation and were given the opportunity to make their views known in writing, to submit information and to provide supporting evidence within the time limit set out in the notice of initiation. All interested parties who so requested and showed that there were reasons why they should be heard were granted a hearing.

(7)

In this regard, the following interested parties made their views known:

(8)

The product concerned is colour television receivers with a diagonal screen size of more than 15,5 cm, whether or not combined in the same housing with a radio broadcast receiver and/or clock. This product is currently classifiable within CN codes ex 8528 12 52, 8528 12 54, 8528 12 56, 8528 12 58, ex 8528 12 62 and 8528 12 66.

(9)

The China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) acting on behalf of the companies for whom the undertaking was granted in conjunction with CCCME submitted that the volume of imports to which the price undertaking applies was established on the basis of a proportion of the apparent consumption of the EU of 15 Member States. It argued that, therefore, the undertaking should be revised in order to take due account of the market of the EU of 25 Member States. It claimed that such revision was essential in order to avoid discrimination in favour of the other exporters of the product concerned to the EU.

(10)

The Member States have made their views known and the majority of them support adapting the measures in order to take account of the Enlargement.

(11)

An analysis was made of the available data and information which confirmed that the import volumes of the product concerned from China into the EU10 were significant. Considering that the volume of imports subject to the price undertaking currently in force was established on the basis of the EU of 15 Member States, it does not take into account the effect of the increase of the market following the Enlargement.

(12)

Considering the above, it is concluded that, to take account of Enlargement it is appropriate to adapt the measures in order to cater for the additional imports volume into the EU10 market.

(13)

The original volume of imports subject to the price undertaking for the EU of 15 Member States was calculated as a growing amount that should reach a given proportion of apparent EU consumption for the fifth year of the undertaking. The amount of the increase of the volume of imports subject to the price undertaking may be calculated following the same calculation method.

(14)

Accordingly, it is considered appropriate that the Commission may accept a proposal for a modified undertaking reflecting the situation after the Enlargement on the basis of the method described in recital 13,

(1)

By Regulation (EC) No 990/2004 (3) the Council amended Regulation (EC) No 151/2003 (4) imposing anti-dumping measures on imports of certain grain oriented electrical sheets (‘the product concerned’) originating in the Russian Federation (‘Russia’). The rate of the duty applicable to the net, free-at-Community-frontier price, before duty, is set for imports of the product concerned at 40,1 % manufactured by the Novolipetsk Iron & Steel Corporation and at 14,7 % manufactured by the OOO Viz Stal.

(2)

On 20 March 2004 the Commission announced through the publication of a notice in the Official Journal of the European Union (5) the initiation of a partial interim review of the measures in force (‘the measures’) pursuant to Articles 11(3) and 22(c) of the basic Regulation.

(3)

The review was launched at the initiative of the Commission in order to examine whether, as a consequence of the enlargement of the European Union on 1 May 2004 (‘Enlargement’) and, bearing in mind the aspect of Community interest, there is a need to adapt the measures in order to avoid a sudden and excessively negative effect on all interested parties including users, distributors and consumers.

(4)

All interested parties, including the Community industry, associations of producers or users in the Community, exporters/producers in the countries concerned, importers and their associations and the relevant authorities of the countries concerned as well as interested parties in the ten new Member States which acceded to the European Union on 1 May 2004 (‘the EU10’) were advised of the initiation of the investigation and were given the opportunity to make their views known in writing, to submit information and to provide supporting evidence within the time limit set out in the notice of initiation. All interested parties who so requested and showed that there were reasons why they should be heard were granted a hearing.

(5)

As set out in Council Regulation (EC) No 990/2004, the investigation concluded that it is in the Community interest to adapt the existing measures, provided that such adaptation does not significantly undermine the desired level of trade defence.

(6)

In accordance with the conclusions of Regulation (EC) 990/2004 the Commission, in conformity with Article 8(2) of the basic Regulation, suggested undertakings to the companies concerned. As a result, undertakings were subsequently offered by (i) one exporting producer of the product concerned in Russia (Novolipetsk Iron & Steel Corporation) jointly with a company in Switzerland (Stinol AG) and (ii) a second exporting producer of the product concerned in Russia (OOO Viz Stal) jointly with its related company Duferco S.A. in Switzerland.

(7)

It should be noted that, in application of Article 22(c) of the basic Regulation, these undertakings are considered as special measures since, in accordance with the conclusions of Regulation (EC) 990/2004, they are not directly equivalent to an anti-dumping duty.

(8)

Nevertheless, in conformity with Regulation (EC) 990/2004, the undertakings oblige each individual producing exporter to respect the import ceilings and, in order that the undertakings can be monitored, the exporting producers concerned have also agreed to broadly respect their traditional selling patterns to individual customers in the EU10. The exporting producers are also aware that if it is found that these sales patterns change significantly, or that the undertakings become in any way difficult or impossible to monitor, the Commission is entitled to withdraw acceptance of the company’s undertaking resulting in definitive anti-dumping duties being imposed in its place, or it may adjust the level of the ceiling, or it may take other remedial action.

(9)

It is also a condition of the undertakings that if they are breached in any way, the Commission will be entitled to withdraw acceptance thereof resulting in definitive anti-dumping duties being imposed in their place.

(10)

The companies will also provide the Commission with regular and detailed information concerning their exports to the Community, meaning that the undertakings can be monitored effectively by the Commission.

(11)

In order that the Commission can monitor effectively the companies’ compliance with the undertakings, when the request for release for free circulation pursuant to an undertaking is presented to the relevant customs authority, exemption from the duty will be conditional upon the presentation of an invoice containing at least the items of information listed in the Annex to Council Regulation (EC) 990/2004. This level of information is also necessary to enable customs authorities to ascertain with sufficient precision that the shipment corresponds to the commercial documents. Where no such invoice is presented, or when it does not correspond to the product presented to customs, the appropriate anti-dumping duty will instead be payable.

(12)

In view of all the above, the offers of undertakings are considered acceptable.

(13)

The acceptance of the undertakings is limited to an initial period of six months without prejudice to the normal duration of the measures and they shall lapse after this period, unless the Commission considers it is appropriate to extend period of application of special measures for next six months.

(14)

In view of the unusual circumstances of this case and the inherent risk of breaches of undertakings caused by the price differences between the EU10 and the EU15 and their short term character, it is considered that sufficient grounds exist to make certain imports of the product concerned subject to registration for a maximum period of nine months in accordance with Article 14 (5) of the basic Regulation.

(15)

Customs authorities are therefore directed to take the appropriate steps to register imports into the Community of the product concerned originating in Russia exported by the companies which have offered acceptable undertakings and for which benefit from the exemption to the anti-dumping duties is sought.

(16)

In the event of a finding of a breach of the undertakings, duties may be levied retroactively on goods entered into free circulation in the Community from the date of the breach of the undertaking,

(1)

Following an expiry and an interim review, by Regulation (EC) No 658/2002 (3), the Council imposed a definitive anti-dumping duty on imports of ammonium nitrate (the ‘product concerned’) originating in the Russian Federation (‘Russia’). By Regulation (EC) No 132/2001 (4), the Council imposed a definitive anti-dumping duty on imports of ammonium nitrate originating in Ukraine. By Regulation (EC) No 993/2004 (5) the Council amended Regulations (EC) No 658/2002 and (EC) No 132/2001.

(2)

The measures are specific duty of 47,07 EUR/tonne in the case of Russia and 33,25 EUR/tonne in the case of Ukraine.

(3)

On 20 March 2004 the Commission announced through the publication of a notice in the Official Journal of the European Union (6) the initiation of a partial interim review of the measures in force (‘the measures’) pursuant to Articles 11(3) and 22(c) of the basic Regulation.

(4)

The review was launched at the initiative of the Commission in order to examine whether, as a consequence of the enlargement of the European Union on 1 May 2004 (‘Enlargement’) and, bearing in mind the aspect of Community interest, there is a need to adapt the measures in order to avoid a sudden and excessively negative effect on all interested parties including users, distributors and consumers.

(5)

All interested parties, including the Community industry, associations of producers or users in the Community, exporters/producers in the countries concerned, importers and their associations and the relevant authorities of the countries concerned as well as interested parties in the 10 new Member States which acceded to the European Union on 1 May 2004 (the ‘EU10’) were advised of the initiation of the investigation and were given the opportunity to make their views known in writing, to submit information and to provide supporting evidence within the time-limit set out in the notice of initiation. All interested parties who so requested and showed that there were reasons why they should be heard were granted a hearing.

(6)

As set out in Council Regulation (EC) No 993/2004, the investigation concluded that it is in the Community interest to adapt the existing measures, provided that such adaptation does not significantly undermine the desired level of trade defence.

(7)

In accordance with the conclusions of Regulation (EC) No 993/2004, the Commission, in conformity with Article 8 (2) of the basic Regulation, suggested undertakings to the companies concerned. As a result, undertakings were subsequently proposed by, (i) one exporting producer of the product concerned in Ukraine (OJSC ‘Azot’), (ii) an exporting producer in Russia (CJSC MCC Eurochem in respect of goods produced at its production facilities of JSC Nak Azot, Russia) jointly with its related company (Cumberland Sound Ltd, British Virgin Islands), (iii) two related exporting producers in Russia (OAO Kirovo — Chepetsky Chimkombinat and JSC ‘Azot’), separately and (iv) two related exporting producers jointly (Joint Stock Company ‘Acron’, Russia and Joint Stock Company ‘Dorogobuzh’, Russia).

(8)

From the submissions of OAO ‘Kirovo — Chepetsky Chimkombinat’ and publicly available information on the Internet, it is known to the Commission that JSC ‘Azot’ and OAO ‘Kirovo — Chepetsky Chimkombinat’ are linked via Agrochemical Corporation ‘Azot’, which owns considerably more than 5 % of the capital of each of the companies. Therefore, in accordance with an Article 2 of the basic Regulation and the definition of related parties set out in the Article 143 of Commission Regulation (EEC) 2454/93 (7), as last amended by Regulation (EC) No 2286/2003 (8), the Commission considers JSC ‘Azot’ and OAO ‘Kirovo — Chepetsky Chimkombinat’ as related parties. It should be noted that the abnormal increases of the export volumes of one of these two exporting producers, OAO ‘Kirovo — Chepetsky Chimkombinat’, to the EU10 observed during the first months of 2004 were higher than the combined traditional export volumes to the EU10 of both JSC ‘Azot’ and OAO ‘Kirovo — Chepetsky Chimkombinat’. Accordingly, the undertaking offers submitted by these two exporting producers are rejected because the undertaking ceiling for the two exporting producers taken together, calculated as traditional export volumes to the EU10 in 2001 and 2002 minus the abnormal increases in export volumes to the EU10 observed in the first months of 2004, is negative.

(9)

It should be noted that, in application of Article 22(c) of the basic Regulation, any undertakings accepted by this Regulation are considered as special measures since, in accordance with the conclusions of Regulation (EC) No 993/2004, they are not directly equivalent to an anti-dumping duty.

(10)

Nevertheless, in conformity with Regulation (EC) No 993/2004, the undertakings oblige each individual producing exporter to respect minimum import prices within the framework of import ceilings and, in order that the undertakings can be monitored, the exporting producers concerned have also agreed to broadly respect their traditional selling patterns to individual customers in the EU10. The exporting producers are also aware that if it is found that these sales patterns change significantly, or that the undertakings become in any way difficult or impossible to monitor, the Commission is entitled to withdraw acceptance of the company’s undertaking resulting in definitive anti-dumping duties being imposed in its place, or it may adjust the level of the ceiling, or it may take other remedial action.

(11)

It is also a condition of the undertakings that if they are breached in any way, the Commission will be entitled to withdraw acceptance thereof resulting in definitive anti-dumping duties being imposed in their place.

(12)

The companies will also provide the Commission with regular and detailed information concerning their exports to the Community, meaning that the undertakings can be monitored effectively by the Commission.

(13)

In order that the Commission can monitor effectively the companies’ compliance with the undertakings, when the request for release for free circulation pursuant to an undertaking is presented to the relevant customs authority, exemption from the duty will be conditional upon the presentation of an invoice containing at least the items of information listed in the Annex to Council Regulation (EC) No 993/2004. This level of information is also necessary to enable customs authorities to ascertain with sufficient precision that the shipment corresponds to the commercial documents. Where no such invoice is presented, or when it does not correspond to the product presented to customs, the appropriate anti-dumping duty will instead be payable.

(14)

In view of all the above, the offers of undertakings submitted by OJSC ‘Azot’, CJSC MCC Eurochem in respect of goods produced at its production facilities of JSC Nak Azot, Russia, and Joint Stock Company ‘Acron’ together with Joint Stock Company ‘Dorogobuzh’ are considered acceptable.

(15)

The acceptance of the undertakings is limited to an initial period of six months without prejudice to the normal duration of the measures. However, six months after acceptance of the undertakings, their continued acceptance will be subject to an appraisal by the Commission to verify whether the exceptional and negative conditions for end users in the EU10 which led to the acceptance of the undertakings still exist. In view of the short term character of the undertakings and the exceptional circumstances under which they are accepted the Commission services may, after consultation of the Advisory Committee, adapt some of the terms of the undertakings, if after a reasonable period of time it is established that the undertakings are not achieving their intended results in terms of allowing traditional export flows to the EU10 to continue. However, the adapted terms of the undertakings must continue to ensure a significant contribution to the removal of injury.

(16)

In view of the unusual circumstances of this case and the inherent risk of breaches of undertakings caused by the price differences between the EU10 and the EU15 and their short term character, it is considered that sufficient grounds exist to make certain imports of the product concerned subject to registration for a maximum period of nine months in accordance with Article 14(5) of the basic Regulation.

(17)

Customs authorities are therefore directed to take the appropriate steps to register imports into the Community of the product concerned originating in Ukraine and Russia exported by the companies which have offered acceptable undertakings and for which benefit from the exemption to the anti-dumping duties is sought.

(18)

In the event of a finding of a breach of the undertakings, duties may be levied retroactively on goods entered into free circulation in the Community from the date of the breach of the undertaking,

(1)

Pursuant to Regulation (EC) No 969/2000 (3) the Council amended and extended the measures imposed by Regulation (EC) No 3068/92 (4), as amended by Regulations (EC) No 643/94 (5) and (EC) No 449/98 (6), on imports into the Community of potassium chloride (the ‘product concerned’) originating in the Republic of Belarus (‘Belarus’), the Russian Federation (‘Russia’) and Ukraine. Pursuant to Regulation (EC) No 999/2004 (7) the Council amended Regulation (EC) No 969/2000.

(2)

The measures are fixed duty amounts, established by category and grade of product, ranging from 19,51 EUR/tonne to 48,19 EUR/tonne in the case of Belarus, 19,61 EUR/tonne to 40,63 EUR/tonne in the case of Russia and 19,61 EUR/tonne to 48,19 EUR/tonne in the case of Ukraine.

(3)

On 20 March 2004 the Commission announced through the publication of a notice in the Official Journal of the European Union (8) the initiation of a partial interim review of the measures in force (‘the measures’) pursuant to Articles 11(3) and 22(c) of the basic Regulation.

(4)

The review was launched at the initiative of the Commission in order to examine whether, as a consequence of the enlargement of the European Union on 1 May 2004 (‘enlargement’) and, bearing in mind the aspect of Community interest, there is a need to adapt the measures in order to avoid a sudden and excessively negative effect on all interested parties including users, distributors and consumers.

(5)

All interested parties known to the Commission, including the Community industry, associations of producers or users in the Community, exporters/producers in the countries concerned, importers and their associations and the relevant authorities of the countries concerned as well as interested parties in the ten new Member States which acceded to the European Union on 1 May 2004 (the ‘EU10’) were advised of the initiation of the investigation and were given the opportunity to make their views known in writing, to submit information and to provide supporting evidence within the time-limit set out in the notice of initiation. All interested parties who so requested and showed that there were reasons why they should be heard were granted a hearing.

(6)

As set out in Council Regulation (EC) No 992/2004 the investigation concluded that it is in the Community interest to adapt the existing measures, provided that such adaptation does not significantly undermine the desired level of trade defence.

(7)

In accordance with the conclusions of Regulation (EC) No 992/2004, the Commission, in conformity with Article 8(2) of the basic Regulation, suggested undertakings to the companies concerned. As a result, undertakings were subsequently offered by (i) one exporting producer of the product concerned in Belarus (Republican Unitary Enterprise Production Amalgamation Belaruskali) jointly with its related companies in Russia (JSC International Potash Company), Austria (Belurs Handelsgesellschaft mbH) and Lithuania (UAB Baltkalis), (ii) an exporting producer in Russia (JSC Silvinit) jointly with its related companies in Russia (JSC International Potash Company) and Austria (Belurs Handelsgesellschaft mbH) and (iii) a second exporting producer in Russia (JSC Uralkali) jointly with a company in Cyprus (Fertexim Ltd).

(8)

It should be noted that, in application of Article 22(c) of the basic Regulation, these undertakings are considered as special measures since, in accordance with the conclusions of Regulation (EC) No 992/2004, they are not directly equivalent to an anti-dumping duty.

(9)

Nevertheless, in conformity with Regulation (EC) No 992/2004, the undertakings oblige each individual producing exporter to respect minimum import prices within the framework of import ceilings and, in order that the undertakings can be monitored, the exporting producers concerned have also agreed to broadly respect their traditional selling patterns to individual customers in the EU10. The exporting producers are also aware that if it is found that these traditional sales patterns change significantly, or that the undertakings become in any way difficult or impossible to monitor, the Commission is entitled to withdraw acceptance of the company’s undertaking resulting in definitive anti-dumping duties being imposed in its place, or it may adjust the level of the ceiling, or it may take other remedial action.

(10)

It is also a condition of the undertakings that if they are breached in any way, the Commission will be entitled to withdraw acceptance thereof resulting in definitive anti-dumping duties being imposed in their place.

(11)

The companies will also provide the Commission with regular and detailed information concerning their exports to the Community, meaning that the undertakings can be monitored effectively by the Commission.

(12)

In order that the Commission can monitor effectively the companies’ compliance with the undertakings, when the request for release for free circulation pursuant to an undertaking is presented to the relevant customs authority, exemption from the duty will be conditional upon the presentation of an invoice containing at least the items of information listed in the Annex to Regulation (EC) No 992/2004. This level of information is also necessary to enable customs authorities to ascertain with sufficient precision that the shipment corresponds to the commercial documents. Where no such invoice is presented, or when it does not correspond to the product presented to customs, the appropriate anti-dumping duty will instead be payable.

(13)

In view of all the above, the offers of undertakings are considered acceptable.

(14)

The acceptance of the undertakings is limited to an initial period of 12 months without prejudice to the normal duration of the measures. However, six months after acceptance of the undertakings, their continued acceptance will be subject to an appraisal by the Commission to verify whether the exceptional and negative conditions for end users in the EU10 which led to the acceptance of the undertakings still exist.

(15)

In view of the unusual circumstances of this case and the inherent risk of breaches of undertakings caused by the price differences between the EU10 and the EU15 and their short-term character, it is considered that sufficient grounds exist to make certain imports of the product concerned subject to registration for a maximum period of nine months in accordance with Article 14(5) of the basic Regulation.

(16)

Customs authorities are therefore directed to take the appropriate steps to register imports into the Community of the product concerned originating in Belarus and Russia exported by the companies which have offered acceptable undertakings and for which benefit from the exemption to the anti-dumping duties is sought.

(17)

In the event of a finding of a breach of the undertakings, duties may be levied retroactively on goods entered into free circulation in the Community from the date of the breach of the undertaking,

(1)

On 21 August 2003, the Commission announced, by a notice (‘notice of initiation’) published in the Official Journal of the European Union (3), the initiation of an anti-subsidy proceeding with regard to imports into the Community of certain graphite electrode systems originating in India.

(2)

The proceeding was initiated as a result of a complaint lodged in July 2003 by the European Carbon and Graphite Association (ECGA), acting on behalf of producers representing a major proportion, in this case more than 50 %, of the total Community production of certain graphite electrode systems. The complaint contained evidence of subsidisation of the said product and of material injury resulting there from, which was considered sufficient to justify the initiation of an anti-subsidy proceeding.

(3)

Prior to the initiation of the proceeding, and in accordance with Article 10(9) of the basic Regulation, the Commission notified the Government of India (‘GOI’) that it had received a properly documented complaint alleging that subsidised imports of certain graphite electrode systems originating in India were causing material injury to the Community industry. The GOI was invited for consultation with the aim of clarifying the situation as regards the contents of the complaint and arriving at a mutually agreed solution. Whilst no request for consultations was made by the GOI, due note was taken of written comments made by the GOI with regard to the allegations contained in the complaint regarding subsidised imports and material injury being suffered by the Community industry.

(4)

The initiation of a parallel anti-dumping proceeding concerning imports into the Community of the same product originating in India was announced by a notice published in the Official Journal of the European Union (4) on the same date.

(5)

The Commission officially advised the complainant and other known Community producers, exporting producers, importers, users and suppliers known to be concerned of the initiation of the proceeding. The parties directly concerned were given an opportunity to make their views known in writing and to request a hearing within the time limit set in the notice of initiation.

(6)

The two exporting producers in India, the GOI, as well as Community producers, users and importers/traders made their views known in writing. All parties who so requested within the above time limit and indicated that there were particular reasons why they should be heard were granted an opportunity to be heard.

(7)

In view of the large number of unrelated importers in the Community, it was considered appropriate, in conformity with Article 27 of the basic Regulation, to examine whether sampling should be used. In order to enable the Commission to decide whether sampling would indeed be necessary and, if so, to select a sample, all known unrelated importers were requested, pursuant to Article 27(2) of the basic Regulation, to make themselves known within 15 days of the initiation of the proceeding and to provide the Commission with the information requested in the notice of initiation, for the period from 1 April 2002 to 31 March 2003. Only two unrelated importers agreed to be included in the sample and provided the requested basic information within the deadline. Accordingly, sampling was not considered necessary in this proceeding.

(8)

The Commission sent questionnaires to all parties known to be concerned, to the two unrelated importers referred to above and to all other companies who made themselves known within the deadlines set in the notice of initiation, as well as to the GOI.

(9)

Replies were received from two Indian exporting producers, from the two complainant Community producers, from eight user companies and from the two unrelated importers referred to above. In addition, one user company made a written submission containing some quantitative information and two users’ associations provided the Commission with written submissions.

(10)

The Commission sought and verified all the information it deemed necessary for the purpose of a provisional determination of subsidisation, resulting injury and Community interest. Verification visits were carried out at the premises of the following companies:

(11)

The investigation of subsidisation and injury covered the period from 1 April 2002 to 31 March 2003 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1999 to the end of the IP (‘the period considered’).

(12)

The product concerned is graphite electrodes and/or nipples used for such electrodes, whether imported together or separately. A graphite electrode is a ceramic-moulded or extruded column of graphite. At both ends of this cylinder, threaded tapered ‘sockets’ are machined so that two or more electrodes can be joined to build a column. A connecting part, also in graphite, is used to join two sockets. This part is called a ‘nipple’. Both the graphite electrode and the nipple are usually supplied pre-set as a ‘graphite electrode system’.

(13)

Graphite electrodes and nipples used for such electrodes are produced using petroleum coke, a by-product of the oil industry; and coal tar pitch. The manufacturing process has six steps; namely forming, baking, impregnation, rebaking, graphitising and machining. During the graphitising phase the product is heated electrically to over 3 000 oC and is physically transformed into graphite, the crystalline form of carbon: a unique material with low electrical but high heat conductivity; and high strength and performance at high temperature; that makes it suitable for use in electric arc furnaces. The processing time for a graphite electrode system is approximately two months. There are no product substitutes for graphite electrode systems.

(14)

Graphite electrode systems are used by steel producers in electric arc furnaces; also referred to as ‘mini mills’; as current carrying conductors to produce steel from recycled scrap. Graphite electrodes and nipples used for such electrodes covered by this investigation are only those with an apparent density of 1,65 g/cm3 or more and an electrical resistance of 6,0 μΩ.m or less. Graphite electrode systems which meet these technical parameters can carry a very high rate of power feed.

(15)

One Indian exporter stated that, in some cases, he produced the product concerned without using ‘premium needle coke’, a top quality petroleum coke which, according to this company, was considered by the complainants to be indispensable for producing the product within the specifications as mentioned in recitals 12 to 14. This exporter therefore claimed that graphite electrodes, and nipples used for such electrodes, made without ‘premium needle coke’ should be excluded from the scope of the investigation. Indeed, different qualities of petroleum coke can be used for producing graphite electrode systems. However, it is the basic physical and technical characteristics of the end product and its end uses, irrespective of the raw materials used, which determine the product definition. If graphite electrodes and nipples used for such electrodes originating in India and imported into the Community meet the basic physical and technical characteristics as described in the product definition, they are considered product concerned. Therefore, the claim was rejected.

(16)

The product exported to the Community from India, the product produced and sold domestically in India as well as the one manufactured and sold in the Community by the Community producers were found to have the same basic physical and technical characteristics as well as the same uses and are therefore considered as like products within the meaning of Article 1(5) of the basic Regulation.

(17)

On the basis of the information contained in the complaint and the replies to the Commission’s questionnaire, the following five schemes, which allegedly involve the granting of export subsidies by the GOI, were investigated:

(18)

Schemes (i), (ii), (iii), and (iv) specified above are based on the Foreign Trade (Development and Regulation) Act 1992 (No 22 of 1992) which entered into force on 7 August 1992 (‘Foreign Trade Act’). The Foreign Trade Act authorises the GOI to issue notifications regarding the export and import policy, summarised in the ‘Export and Import Policy’ documents, which are issued by the Ministry of Commerce every five years and updated regularly. The Export and Import Policy document relevant to the IP of this case is the five-year plan for the period 1 April 2002 to 31 March 2007. In addition, the GOI also sets out the procedures governing India’s foreign trade policy in the ‘Handbook of Procedures — 1 April 2002 to 31 March 2007’ (Volume 1), and which is also updated on a regular basis.

(19)

It is clear from the Export and Import Policy covering the period 1 April 2002 to 31 March 2007 that licences/certificates/permissions issued before the entry into force of this Policy shall continue to be valid for the purpose for which such licence/certificate/permission was issued, including during the IP, unless otherwise stipulated.

(20)

Subsequent references in this text to the legal basis for the above-mentioned investigated schemes (i) to (iv) are hereinafter made in relation to the Export and Import Policy covering the period 1 April 2002 to 31 March 2007 and to the ‘Handbook of Procedures — 1 April 2002 to 31 March 2007’ (Volume 1).

(21)

The Income Tax Exemption specified under (v) above is based on the Income Tax Act of 1961, which is amended annually by the Finance Act.

(22)

Article 14(5)(b) of the basic Regulation provides that the 3 % de minimis subsidy threshold applying to imports from certain developing countries, i.e. developing countries which are members of the WTO and which are mentioned in Annex VII of the Agreement on Subsidies and Countervailing Measures (‘ASCM’) as well as for developing countries which are members of the WTO and which have completely eliminated export subsidies, shall expire eight years after the entry into force of the WTO Agreement. Given that the said Agreement entered into force on 1 January 1995, this subsidy threshold no longer applies. The de minimis threshold now applying to imports from all developing countries is 2 % as provided for in Article 14(5)(a) of the basic Regulation. In parallel with the application of the 3 % de minimis threshold which applied to countries mentioned in Annex VII of the ASCM, the EC practice had been to apply to said countries, a de minimis threshold of 0,3 % per individual subsidy scheme. As the specific de minimis threshold which had applied to countries mentioned in Annex VII of the ASCM is no longer applicable, it is considered that the threshold for individual schemes should no longer apply either.

(23)

The DEPB entered into force on 1 April 1997 by means of Customs Notification 34/97. Paragraphs 4.3.1 to 4.3.4 of the Export and Import Policy, and paragraphs 4.37 to 4.53 of the Handbook of Procedures contain a detailed description of the scheme. The DEPB is the successor to the Passbook Scheme which was terminated on 31 March 1997. From the outset, there were two types of the DEPB, DEPB on pre-export basis and DEPB on post-export basis.

(24)

The GOI stressed that the DEPB on pre-export basis was abolished on 1 April 2000 and therefore the scheme is not relevant for the IP. It was established that none of the companies availed of any benefit under the DEPB on pre-export basis, and it is, therefore, not necessary to establish the countervailability of DEPB on pre-export basis. The following analysis of this scheme is thus based on the DEPB on post-export basis only.

(25)

The DEPB on post-export basis is available to manufacturer-exporters or merchant-exporters (i.e. traders).

(26)

Under the scheme, any eligible exporter can apply for credits, which are calculated as a percentage of the value of exported finished products. Such DEPB rates have been established by the Indian authorities for most products, including the product concerned, on the basis of Standard Input-Output Norms (‘SION’). A licence stating the amount of credit granted is issued automatically upon receipt of the application.

(27)

DEPB on post-export basis allows for the use of such credits to offset applicable customs duties on any subsequent imports, except for goods subject to import restrictions or prohibitions. Goods imported against such credits can then be sold on the domestic market (subject to sales tax) or otherwise used.

(28)

DEPB licences are freely transferable and, as a consequence, are frequently sold. The DEPB licence, which is subject to an application fee of 0,5 % of the credit received, is valid for a period of 12 months from the date of issue. Accordingly, licences issued during the two-year period 01 April 2001 to 31 March 2003 were available during the IP either to be sold or to be used to off-set import duties.

(29)

Prior to the IP, i.e. until 31 March 2002, the presentation of a DEPB licence allowed for an off-setting of normal import duty up to the face value of the licence. In addition, the DEPB licence also allowed for an exemption from another duty, the Special Additional Duty (‘SAD’). The SAD is set at 4 % ad valorem of the duty inclusive customs value of most goods imported into India, including the product concerned. Whilst the exemption from the SAD under this scheme was contingent upon the presentation of a DEPB licence, the amount of SAD saved was not deducted from the amount of credit granted in the licence. In effect, therefore, an additional benefit, beyond the face value of the DEPB licence, accrued under the DEPB scheme.

(30)

As from the beginning of the IP, i.e. 1 April 2002, the GOI abolished the exemption from SAD under the DEPB scheme. Therefore, during the IP any off-setting of SAD was directly deducted from the credit on the DEPB licence presented by the importer. To take account of this change to the scheme; and, in effect, to compensate exporters for the benefits previously available through exemption from SAD; the GOI increased the DEPB rates from 1 April 2002 by way of an amendment to the SION for the product concerned. The GOI also issued upon request, supplementary credits for extant licences issued prior to 1 April 2002 to increase the credit granted up to the level of the revised DEPB rate.

(31)

When a company exports goods, it is granted a credit which can be used either to offset customs duties due on future imports of various goods or can simply be sold on the open market.

(32)

The amount of credit is automatically calculated on the basis of SION rates, irrespective of whether inputs have been imported, duty has been paid on them or whether the inputs were actually used for export production and in what quantities. Indeed, a company can claim a licence on the basis of past exports irrespective of whether it makes any imports or purchases goods from other sources. The DEPB credits are considered to be a financial contribution because they are a grant. They involve a direct transfer of funds, as they can either be sold and converted into cash, or used to offset import duties, thus causing the GOI to forego revenue which is otherwise due.

(33)

Article 2(1)(a)(ii) of the basic Regulation provides for an exception for, inter alia, drawback and substitution drawback schemes which conform to the strict rules laid down in Annex I item (i), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback).

(34)

In this case, the exporter is under no obligation to actually consume the goods imported free of duty in the production process and the amount of credit is not calculated in relation to actual inputs used.

(35)

Furthermore, there is no system or procedure in place to confirm which inputs are consumed in the production process of the exported product or whether an excess payment of import duties occurred within the meaning of item (i) of Annex I and Annexes II and III of the basic Regulation.

(36)

Lastly, exporters are eligible for the DEPB benefits regardless of whether they import any inputs at all. In order to obtain the benefit, it is sufficient for an exporter to simply export goods without demonstrating that any input material was imported. Thus, even exporters which procure all of their inputs locally and do not import any goods to be used as inputs are still entitled to the DEPB benefits. Hence, the DEPB on post-export basis does not fulfil the criteria of Annexes I to III of the basic Regulation.

(37)

In the absence of (i) a requirement that imported inputs be consumed in the production process; and (ii) a system of verification as required under Annex II of the basic Regulation, the DEPB on post-export basis cannot be considered as a permitted drawback or substitution drawback scheme (Annex III) under Article 2(1)(a)(ii) of the basic Regulation.

(38)

Since the above exception to the subsidy definition for drawback and substitution drawback schemes, referred to in recital (33), therefore does not apply, the issue of excess remission does not arise and the countervailable benefit is the remission of total import duties normally due on all imports.

(39)

Therefore, since the financial contribution by the GOI confers a benefit upon the DEPB holder and since government revenue, which is otherwise due, is foregone, the scheme constitutes a subsidy. It is a subsidy contingent in law upon export performance within the meaning of Article 3(4)(a) of the basic Regulation because, as explained above, it can only be obtained by exporting. It is therefore deemed to be specific and thus countervailable.

(40)

The benefit for the companies was calculated on the basis of the amount of credit granted in the licences, which have been utilised or transferred (sold) during the IP. In order to determine as accurately as possible the amount of revenue foregone it is necessary to draw a distinction between those licences issued and utilised during the IP, those licences issued and transferred during the IP, those licences issued prior to the IP and utilised during the IP, and those licences issued prior to the IP and transferred during the IP.

(41)

Where a DEPB licence was issued and used during the IP by the co-operating exporting producer to import goods without payment of applicable duties (including SAD), the benefit was calculated on the basis of total import duties foregone, as deducted from the credit balance on the relevant DEPB licence.

(42)

Where the DEPB licence was issued and transferred (sold) during the IP, the benefit was calculated on the basis of the amount of credit granted in the licence (face value), regardless of the sales price of the licence, since the sale of a licence is a pure commercial decision which does not alter the amount of benefit (equivalent to the GOI’s transfer of funds) received from the scheme.

(43)

Where the DEPB licence was issued prior to the IP and used during the IP by the co-operating exporting producer to import goods without payment of applicable duties, the benefit was calculated on the basis of total import duties foregone (including SAD), as deducted from the credit balance on the relevant licence. The supplementary licences issued for the increased DEPB credits, as outlined above, to the extent that they had been used to offset the duties, were also taken into account to determine the amount of revenue foregone by the GOI.

(44)

Where the DEPB licence was issued prior to the IP and transferred (sold) during the IP, it was found that these licences were sold for a price which exceeded their nominal face value. This premium is explained by the additional exemption from SAD allowed by these licences, as explained above. Without knowing the products which were imported by the purchasers of these licences, it is not possible to determine the full amount of revenue foregone by the GOI. However, as a conservative estimate, this amount must have been at least equivalent to the sales price of the licence, as it makes no economic sense for the licence to sell for more than its true worth. The benefit was thus calculated on the basis of the sales price of the licence.

(45)

As outlined in recital (26), the benefit under the DEPB scheme is based on the value of the exported finished products, and is not granted by reference to the quantities manufactured, produced, exported or transported. Therefore, the amount of subsidy calculated has been allocated over total export turnover during the IP, in accordance with Article 7(2) of the basic Regulation. In calculating the benefit, the fees necessarily incurred to obtain the subsidy were deducted, in accordance with Article 7(1)(a) of the basic Regulation.

(46)

The companies claimed that costs incurred by paying specialised agents, sales commissions and various other expenses should be deducted when calculating the benefit under this scheme. In this regard, it should be noted that using third parties for buying and selling licences is a purely commercial decision which does not alter the amount of credit granted in the licences. In any event, only costs necessarily incurred in order to obtain a subsidy are deductible in accordance with Article 7(1)(a) of the basic Regulation. Since the above costs are not necessary in order to qualify for the subsidy, the claims were rejected.

(47)

The companies also claimed that the benefits from their DEPB licenses generated additional income, and thereby increased their overall tax liability, most notably their company income tax. Therefore, it was claimed that the benefit obtained from the DEPB scheme should be reduced by the amount of income tax actually payable.

(48)

How a company chooses to use the benefit conferred under a subsidy scheme, in this case by either using the licenses to offset import duties or to sell the licenses, may have a different impact on the taxation situation of the company. It is not for the investigating authority to examine the possible effect such benefit will have on the taxation situation of that company. Consequently, the claim was rejected.

(49)

Both co-operating companies benefited from this scheme during the IP and obtained subsidies ranging from 14,5 % to 20,4 %.

(50)

The EPCG Scheme was announced on 1 April 1992. During the IP the scheme was regulated by Customs Notification No 28/97 and 29/97 which entered into force on 1 April 1997. Details of the schemes are contained in Chapter 5 of the 2002/2007 Export and Import Policies and Chapter 5 of the Handbook of Procedures.

(51)

The scheme is available to manufacturers/exporters (i.e. every manufacturer in India which exports) or merchants/exporters (i.e. traders) ‘tied’ to supporting manufacturers.

(52)

To benefit from the scheme, a company must provide to the relevant authorities details of the type and value of capital goods, which are to be imported. Depending on the level of export commitment which the company is prepared to undertake, the company will be allowed to import capital goods at either a zero or reduced rate of duty. In order to meet the export obligation, the imported capital goods must be used to produce exported goods. Upon application by the exporter, a licence authorising the import at preferential rates is issued. An application fee is payable to obtain the licence.

(53)

The EPCG licence holder can also source the capital goods indigenously. In such case, the indigenous manufacturer of capital goods may avail of the benefit for duty free import of components required for the manufacture of such capital goods. Alternatively, the indigenous manufacturer can claim the benefit of deemed export in respect of the supply of capital goods to an EPCG Licence holder.

(54)

There is an export obligation in order to qualify for the EPCG Scheme. The export obligation must be fulfilled by exporting goods manufactured or produced by means of the capital goods, and the value of such exports must exceed the average level of exports of the same product achieved by the company in the preceding three licensing years.

(55)

Recently, there has been a change in the conditions of the scheme in respect of the calculation of the export obligation. Under the new rules, the companies will have eight years to fulfil the export obligation (the amount of exports must be at least six times the value of the total duty exemption for imported capital goods). However, this change does not alter the fundamental operation of the scheme.

(56)

The payment by an exporter of a reduced or zero rate of import duty constitutes a financial contribution by the GOI, since revenue otherwise due is foregone and a benefit is conferred on the recipient by lowering or exempting the import duties normally payable. The licence cannot be obtained without a commitment to export goods. As such, the EPCG Scheme is a subsidy contingent in law upon export performance within the meaning of Article 3(4)(a) of the basic Regulation, and is deemed to be specific and thus countervailable.

(57)

The benefit to the companies has been calculated on the basis of the amount of unpaid customs duty on imported capital goods spread over a period which reflects the normal depreciation period of such capital goods in the industry of the product concerned, pursuant to Article 7(3) of the basic Regulation. In accordance with established practice, the amount of the benefit which is attributable to the IP has been adjusted by adding interest during the IP in order to reflect the value of the benefit over time and thereby establish the full benefit of this scheme to the recipient. Given the nature of the subsidy, which is equivalent to a one-time grant, the company specific commercial interest rate during the IP was considered appropriate. As outlined in recital (54), the benefit under the EPCG scheme is dependant on the increased value of the exported finished products, and is not granted by reference to the quantities manufactured produced, exported or transported. Therefore, the amount of subsidy has been allocated over total export turnover during the IP, in accordance with Article 7(2) of the basic Regulation.

(58)

Both co-operating exporters benefited from the EPCG scheme during the IP and obtained subsidies ranging from 0,1 % to 0,3 %.

(59)

The ALS has been in operation since 1977-78. The scheme is specified in paragraphs 4.1.1 to 4.1.7 of the Export and Import Policy and parts of chapter 4 of the Handbook of Procedures.

(60)

Advance Licences are available to exporters, manufacturer-exporters or merchant-exporters ‘tied to’ supporting manufacturer(s) for the duty-free import of inputs used in the production of goods for export.

(61)

The volume of imports allowed under this scheme is determined as a percentage of the volume of exported finished products. The advance licences measure the units of authorised imports in terms of their quantity as well as in terms of their value. In both cases, the rates used to determine the allowable duty free purchases are established for most products, including the product concerned, on the basis of SION. The input items specified in the advance licences are items used in the production of the relevant finished products.

(62)

Advance licences can be issued for:

(63)

It was established during the verification that only the ALS referred to under (i) above (physical exports) was used by one manufacturing-exporter during the IP. It is therefore not necessary to establish the countervailability of the above-mentioned categories (ii), (iii) and (iv) of the ALS in the context of this investigation.

(64)

Only exporting companies are granted licences which can be used to offset amounts of customs duties on imports. In this regard, the scheme is contingent upon export performance.

(65)

As mentioned above, it was established that the ALS, in respect of ‘physical exports’, was used by one investigated company during the IP. The company used the ALS for duty-free imports of inputs for exported goods.

(66)

The GOI claimed that the ALS is a quantity based scheme, and that the inputs allowed under this licence are with reference to the quantity of exports. It was also submitted that whatever inputs are imported under the ALS, the same inputs have to be used in the manufacturing of the exported products or for replenishment of the stock of inputs used in the products already exported. According to the GOI, the imported inputs have to be used by the exporter and no such inputs are allowed to be sold or transferred.

(67)

However, it was noted that there was no system or procedure in place to confirm whether and which inputs are consumed in the production process of exported goods. The system only shows that the goods imported duty-free have been used in the production process, with no distinction between the destination of the goods (domestic or export market).

(68)

Article 2(1)(a)(ii) of the basic Regulation provides for an exception for, inter alia, drawback and substitution drawback schemes which conform to the strict rules laid down in Annex I item (i), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation.

(69)

In the absence of a system or procedure in place to confirm which inputs are consumed in the production process of the exported product or whether an excess payment of import duties occurred within the meaning of item (i) of Annex I and Annexes II and III of the basic Regulation, the ALS cannot be considered as a permitted drawback or substitution drawback scheme under Article 2(1)(a)(ii) of the basic Regulation.

(70)

Since the above exception to the subsidy definition for drawback and substitution drawback schemes referred to in recital 68 does not apply, the issue of excess remission does not arise and the countervailable benefit is the remission of total import duties normally due on all imports.

(71)

The benefit for the company was calculated on the basis of the amount of credit granted in the licences, which has been utilised during the IP. As outlined in recital 61, the benefit under the ALS scheme is based both on the quantity and on the value of the exported finished products. Therefore, the amount of subsidy calculated has been allocated over total export turnover during the IP, in accordance with Article 7(2) of the basic Regulation. In calculating the benefit, the fees necessarily incurred to obtain the subsidy were deducted, in accordance with Article 7(1)(a) of the basic Regulation. On this basis, the subsidy obtained was 0,2 %.

(72)

It was verified that neither exporting producer is located in either an EPZ or an EOU. Accordingly, no further analysis of this scheme was considered necessary for the purposes of this investigation.

(73)

The Income Tax Act 1961 is the legal basis under which Income Tax Exemption operates. The Act, which is amended yearly by the Finance Act, sets out the basis for the collection of taxes as well as various exemptions/deductions which can be claimed. Among the exemptions which can be claimed by firms are those covered by sections 10A, 10B and 80HHC of the Act, which provide an income tax exemption on profits from export sales.

(74)

The GOI stated that the Income Tax Exemption was abolished as of 31 March 2003 and provided evidence to that effect. While the scheme may have conferred benefits on the exporters concerned during the IP, the scheme will not confer any benefits to exporting companies after that date. In these circumstances, and in accordance with Article 15(1) of the basic Regulation, it is not necessary to establish the countervailability of the Income Tax Exemption.

(75)

The amount of countervailable subsidies in accordance with the provisions of the basic Regulation, expressed ad valorem, for the investigated exporting producers are 14,6 % and 20,9 %. Given that the level of the overall co-operation for India was high (100 % of the exports of the product concerned from India to the Community), the residual subsidy margin for all other companies was set at the level for the company with the highest individual margin, i.e. 20,9 %.

(76)

Within the Community, the like product is manufactured by SGL AG (‘SGL’) and several subsidiaries of UCAR SA (‘UCAR’), namely UCAR SNC, UCAR Electrodos Ibérica SL and Graftech SpA, on behalf of which the complaint was lodged. Production facilities of SGL and UCAR are located in Austria, Belgium, Germany, France, Italy and Spain.

(77)

In addition to the two complainant Community producers, SGL and UCAR, the like product was manufactured in the Community by two other producers during the period 1999-IP. One of these two other producers went into insolvency and had to ask for judicial protection under the German bankruptcy law. This latter company stopped producing the like product as of November 2002. These two companies expressed their support in respect of the complaint but declined the Commission’s invitation to co-operate actively in the investigation. It is concluded that all the above four producers constitute the Community production within the meaning of Article 9(1) of the basic Regulation.

(78)

The two complainant Community producers properly replied to the questionnaire and fully co-operated in the investigation. During the IP, they represented more than 80 % of the Community production.

(79)

They are deemed to constitute the Community industry within the meaning of Article 9(1) and Article 10(8) of the basic Regulation and will hereafter be referred to as the ‘Community industry’.

(80)

Given that there are only two Indian exporting producers of the product concerned, and given that the Community industry also comprises only two producers, data relating to either imports of the product concerned into the Community originating in India, or to the Community industry had to be indexed in order to preserve confidentiality pursuant to Article 29 of the basic Regulation.

(81)

Community consumption was established on the basis of the sales volumes of the Community industry on the Community market, the sales volumes of the other Community producers on the Community market estimated on the basis of best available evidence, the sales volumes of the two Indian co-operating exporting producers on the Community market, the sales volumes imported from Poland obtained from the co-operation of SGL, and Eurostat data for the remaining imports in the Community, duly adjusted where appropriate.

(82)

On this basis, between 1999 and the IP, Community consumption of the product concerned increased by 9 %. Specifically, it increased by 14 % between 1999 and 2000, declined by 7 percentage points in 2001, by a further 1 percentage point in 2002, before increasing by 3 percentage points in the IP. As the product concerned is primarily used in the electric steel industry, the development of consumption has to be seen against the economic trends of this particular sector, which displayed a sharp acceleration in 2000, followed by a downturn from 2001 onwards.

(83)

The volume of imports of the product concerned from India into the Community increased by 76 % between 1999 and the IP. In detail, imports from India increased by 45 % between 1999 and 2000, by a further 31 percentage points in 2001 and remained almost stable at this level in 2002 and the IP.

(84)

The market share held by exporters in the country concerned increased by 3,4 percentage points (or 61 %) during the period considered to reach a level of 8 to 10 % during the IP. It first rose by 1,5 percentage point between 1999 and 2000, by a further 2 percentage points in 2001 and stayed relatively stable at this level through 2002 and the IP. It should be noted that over the period 1999 to the IP, the increase in imports and market shares from the country concerned coincided with an increase in consumption of 9 %.

(85)

Between 1999 and the IP, the average price of imports of the product concerned originating in India increased by 2 % in 2000, by a further 8 percentage points in 2001 and then declined by 9 percentage points in 2002, a level at which it stabilised in the IP. In the IP, the average import price of the product concerned originating in India was 1 % higher than in 1999.

(86)

A comparison for comparable models of the product concerned was made between the exporting producers' and the Community industry's average selling prices in the Community. To this end, Community industry’s ex-works prices to unrelated customers, net of all rebates and taxes have been compared with the CIF Community frontier prices of exporting producers of India, duly adjusted for post importation costs. The comparison showed that during the IP the product concerned originating in India sold in the Community undercut the Community industry's prices by between 6,5 % and 12,2 %.

(87)

It should be noted that these price undercutting margins do not fully illustrate the effect of the subsidised imports on prices of the Community industry, given that both price depression and price suppression were observed, as evidenced by the relatively low profitability reached by the Community industry during the IP, whilst it could have expected a reasonably higher profit in the absence of subsidisation.

(88)

Pursuant to Article 8(5) of the basic Regulation, the Commission examined all relevant economic factors and indices having a bearing on the state of the Community industry.

(89)

In order to make a meaningful assessment of certain injury indicators, it was necessary to consolidate adequately some data pertaining to UCAR together with those of its production subsidiaries in the Community (see recital 76 above).

(90)

The Commission paid particular attention to all possible consequences on injury indicators arising from the past anti-competitive behaviour of the two complainant Community producers. The Commission notably ensured that the starting point for injury assessment (1999) was free from any anti-competitive practise (see recitals 121, 122, 125 below). Additionally, when establishing costs and profitability for the Community industry, the Commission explicitly requested and verified that the direct cost of the payments, or any indirect costs (including the financing charges) thereof, linked to penalties imposed by competition authorities were clearly excluded, so as to provide a profit picture excluding any of these extraordinary expenditures.

(91)

Community industry’s production increased by 14 % in 2000, declined by 16 percentage points in 2001, declined by a further 4 percentage points in 2002 and increased by 5 percentage points in the IP. The sharp increase observed in 2000 was due to the good economic climate, which also translated into a rising capacity utilisation rate that year.

(92)

The production capacity decreased in 2000 by around 2 % and stayed at this level in 2001. In 2002 and the IP, production capacity further decreased by respectively 5 percentage points and 2 percentage points. In the IP, production capacity was 9 % lower than in 1999, principally as a result of the mothballing of a facility of a Community producer, effective during the whole IP.

(93)

Capacity utilisation started from a level of 70 % in 1999, before increasing to 81 % in 2000 driven by strong demand, in particular from the electric steel industry. In 2001 and 2002, it fell back to a level of 70 % before rising to 76 % in the IP.

(94)

The investigation found that there are several causes at the root of the economic problems facing the above mentioned mothballed facility, amongst which the two most noticeable are: (i) high production costs linked to the price of electricity in this particular country, and (ii) the competition from subsidised imports originating in India. Given the difficulty to disentangle one cause from the other, the Commission examined what would have been the trends for capacity and capacity utilisation in 2002 and the IP if this facility had not been mothballed. The volume of production was left unchanged in this simulation as other production facilities of this Community producer raised their output in order to fill the gap. As shown in the table below, if this facility had not been mothballed, both production capacity and capacity utilisation for the Community industry as a whole would have reached in the IP a level very close to that of 1999.

(95)

During the IP, inventories of finished products represented around 3 % of Community industry’s total production volume. The level of closing stocks of the Community industry increased globally during the period considered and was around five times higher in the IP compared to 1999. However, the investigation found that the development of inventories is not regarded a particularly relevant indicator of the economic situation of the Community industry, as Community producers generally produce to order and therefore stocks are usually goods awaiting dispatch to customers.

(96)

Sales by the Community industry of its own production on the Community market to unrelated customers declined by 1 % between 1999 and the IP. More specifically, they rose sharply by 16 % in 2000, dropped by 17 percentage points in 2001 and by a further 5 percentage points in 2002, before rising again by 5 percentage points in the IP. The development of sales volume mirrors closely economic trends in the electric steel industry, which after the boom observed in 2000, suffered a downturn in 2001 and 2002.